Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 1153 - MADRAS HIGH COURTDepreciation on software license acquired - @60% or 25% - AO of the view that assessee were only licenses, which are intangible and depreciation allowable @25% -Tribunal held that the software license acquired by the assessee are in the nature of software application and eligible to claim depreciation at 60% ? - HELD THAT:- If a particular article would fall within the description by the force of the words used, it is impermissible to ignore the word 'description' and going by the usage of the equipment purchased by the assessee, a decision has to be arrived at. We find that there is no error in the decision arrived at by the Tribunal by taking note of the specific entry in contra distinction with the general entry. Therefore, the first substantial question of law has to be necessarily answered against the Revenue. Nature of expenditure - payment for non compete fee - revenue expenditure or capital expenditure - AO alleged that assessee derived any enduring benefit - HELD THAT:- Tribunal accepted the case of the assessee by interpreting the non compete clause in the agreement, which has been reproduced in paragraph 25 of the impugned order. After analyzing the same, the Tribunal held that the tenor of the agreement was only 18 months and it could not be stated that the assessee derived any enduring benefit due to the payment effected by it for obtaining certain commitments from one Mr.V.Shankar and restricting himself from indulging in any competition with the business of the assessee or from weaning way the employees. The Tribunal took note of the decision a Division Bench of this Court in the case of M/s.Asianet Communications Ltd. Vs. CIT [2018 (8) TMI 1554 - MADRAS HIGH COURT] to which, one of us (TSSJ) was a party, wherein this Court considered a similar condition imposed in a non compete agreement. Therefore, we find that the Tribunal, on appreciation of the factual position, rightly held that a non compete fee has to be treated as a revenue expenditure. Hence, the second substantial question of law is to be necessarily answered against the Revenue.
|